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Started By
Message
re: SHORT THE DOLLAR
Posted on 11/7/12 at 4:00 pm to CaptainJ47
Posted on 11/7/12 at 4:00 pm to CaptainJ47
quote:
First, the euro- short term due to Greece this will likely stay flat. In particular the long-term view that the dollar is the relative safe haven of the two will keep the pair in its current range.
If the dollar is the relative safe haven compared to the euro than it will appreciate, I'm not sure what you're getting at with Greece. This is the thing about Greece that people need to understand, the EU actually doesn't care about Greece that much. The holes in the ESM and EFSF can be plugged quickly if Greece were to default in an unorderly fashion, and the ECB has several programs that could fund the non-Greek banks that hold GGBs and Hellenic bank debt. The reason that the onus has been on Greece was for precedent of actions going forward rather than for news itself.
quote:
When rates are artificially low because the government is the primary buyer of notes. This easy monetary policy will continue for the foreseeable future causing an escalation of national debt.
The Fed monetizing the debt does not cause an escaltion of national debt, you're calling the cause the effect and vice versa. In academia lower interest rates would signal a depreciation of the currency but this isn't an ivory tower. I watch correlations and relationships taught in school break every single day, and mean reversion must be based on like time periods rather than based on all available data.
quote:
Eventually, and as you can see in my original post I didn't say the dollar would crash today, but it will when debt as a percent of GDP doesn't normalize.
Like was said before, it really doesn't matter if D/GDP normalizes or not, it just depends on the relative ratios around the world.
quote:
The debt growing is assumed but the only way to prevent this is to grow your way out.
There are several ways to correct unsustainable debt: inflation, default, restructuring (whether negotiated or forced), or war. All of these are more likely than us growing out of our debt. People need to get used to developed countries having "unsustainable" levels of debt for the future. We either have to take an austerity hit with decreasing relative standards of living (which will happen regardless of austerity) or continue to be better than the other developed countries with unsustainable levels of debt, which we are doing so far.
quote:
With the election I see no reason to believe growth will exist in a significant way to have this moderate.
I agree with this.
0
Posted on 11/7/12 at 4:13 pm to OFWHAP
quote:
For one, if investors perceive that the US is not taking its debt problem seriously, they will stop purchasing US bonds, which will increase borrowing costs and our debt burden. In that case the Federal Reserve will need to step in and purchase more debt than it is already doing, which will lead to an increase in the monetary base/money supply, which will also lead to a further weakening of the US dollar in addition to the weakening resulting from a decreasing foreign demand for US debt. Central banks worldwide are already diversifying away from Treasuries because they lose money by holding our debt due to the combination of our zero-interest rate policy and the depreciation of the dollar.
In theory increasing the monetary base would depreciate the currency, in practice it won't happen until the velocity of money picks up. You know that the value of the dollar has actually appreciated since the beginning of the QE programs? Even if velocity spiked the Fed can actually repo out as much of the money in the system as they want at any point in time. They won't suddenly do that because that would be a huge disruption to the economy but keep in mind the Fed has all the tools necessary to reign any threat of inflation they want. It's deflation that truly scares the shite out of them.
Also, where are you getting the idea that central banks are diversifying from treasuries? I see no data that supports that, there may be fluctuations of holdings from different time periods but that is usually due to internal reasons rather than our issues. The fact remains that there still is no better safe haven.
quote:
One advantage we have over Europe is that individual nations in the Euro zone are unable to print money/devalue their currency, while we have complete freedom to do so. However if you do so too much, you risk losing credibility in the capital markets and investors will punish you by driving up borrowing costs and making it more expensive for you to finance deficit spending.
This is true for the most part.
Posted on 11/9/12 at 8:51 am to BennyAndTheInkJets
quote:
In theory increasing the monetary base would depreciate the currency, in practice it won't happen until the velocity of money picks up. You know that the value of the dollar has actually appreciated since the beginning of the QE programs? Even if velocity spiked the Fed can actually repo out as much of the money in the system as they want at any point in time. They won't suddenly do that because that would be a huge disruption to the economy but keep in mind the Fed has all the tools necessary to reign any threat of inflation they want. It's deflation that truly scares the shite out of them.
Posted on 11/9/12 at 1:08 pm to TheHiddenFlask
It takes a crane to get the monetary base out?
Posted on 11/9/12 at 1:34 pm to BennyAndTheInkJets
It's a boom.
Hoping to draw attention with a very vauge picture.
Hoping to draw attention with a very vauge picture.
Posted on 1/30/13 at 6:12 am to TheHiddenFlask
Just a bump to review.
Appears the dollar has sank agains the Euro somewhat significantly from the 1.25 to 1.35 range. This is not an insignificant move. Obviously there has been Yen weakness as their policies by the BOJ have tried to spur growth.
Now two months out from the election, no significant legislative agreement on anything, what do folks think now about the anticipated future strength in the dollar? Would love to hear the board's thoughts.
I will hang up and listen.
Appears the dollar has sank agains the Euro somewhat significantly from the 1.25 to 1.35 range. This is not an insignificant move. Obviously there has been Yen weakness as their policies by the BOJ have tried to spur growth.
Now two months out from the election, no significant legislative agreement on anything, what do folks think now about the anticipated future strength in the dollar? Would love to hear the board's thoughts.
I will hang up and listen.
Posted on 1/30/13 at 1:11 pm to CaptainJ47
I still think you are a clown.
So much so that you don't even think you we're wrong. The yen is down 12% vs the USD and the EUR is is up 5%.
Somehow you marginalized the move that is 2x larger as if the EZ hasn't taken monetary policy by the horns as well and as if you would get some kind of pass on that.
Additionally, your chicken little shtick was not only wrong in its explicit premise, but also on its implied premise that the US economy would go down the tubes. 30% annualized return on the SP500 says hi.
So much so that you don't even think you we're wrong. The yen is down 12% vs the USD and the EUR is is up 5%.
Somehow you marginalized the move that is 2x larger as if the EZ hasn't taken monetary policy by the horns as well and as if you would get some kind of pass on that.
Additionally, your chicken little shtick was not only wrong in its explicit premise, but also on its implied premise that the US economy would go down the tubes. 30% annualized return on the SP500 says hi.
Posted on 1/30/13 at 1:25 pm to CaptainJ47
The dollar index has depreciated 1.67% since you declared to short the dollar. Equities during this time are up ~7%.
When we have a correction in the equity markets within the next month(s), I'm pretty certain the dollar index will be higher than on 11/6.
When we have a correction in the equity markets within the next month(s), I'm pretty certain the dollar index will be higher than on 11/6.
Posted on 1/30/13 at 4:08 pm to BennyAndTheInkJets
I've never really followed FX markets much, and I hesitate to post in this particular thread, but...
Regarding the negative correlation between the S&P500 and the USD, (1) how long do you think this will last, and (2) do you think there is still an international investor fear component to it, or is it more a matter of lower corporate growth signaling a lower velocity for the domestic money supply?
Regarding the negative correlation between the S&P500 and the USD, (1) how long do you think this will last, and (2) do you think there is still an international investor fear component to it, or is it more a matter of lower corporate growth signaling a lower velocity for the domestic money supply?
Posted on 1/30/13 at 5:35 pm to Doc Fenton
I just learned all this so it sounds familiar but exchange rates were hard for me 
Posted on 1/30/13 at 8:21 pm to jimbeam
Hey douche bag Flask- I was asking a legitimate question. I specifically pointed out that I was aware of the Yen's move. I will also state that I would anticipate the trend to continue.
I simply wanted to get additional insight on the dollars moves. Obviously there are headwinds in the US political system, I am curious to know the impact.
Look I am still not a fan of the dollar. The printing of money will eventually catch up to the US. Maybe not tomorrow but in the future it simply isn't sustainable.
I simply wanted to get additional insight on the dollars moves. Obviously there are headwinds in the US political system, I am curious to know the impact.
Look I am still not a fan of the dollar. The printing of money will eventually catch up to the US. Maybe not tomorrow but in the future it simply isn't sustainable.
This post was edited on 1/30/13 at 8:27 pm
Posted on 1/30/13 at 10:12 pm to CaptainJ47
quote:
Look I am still not a fan of the dollar.
Everyone is entitled to an opinion. Personally I think the dollar is no worse than any other currency (well, maybe the Swiss Franc) but if you have the courage of your convictions quit posting about it and place your bet.
Borrow as much as you can right now at a long term fixed interest rate. Then turn around and use the money to buy stuff that isn't tied to the dollar. There are lots of choices - real estate, canned goods, bullets, precious metals (sorta), sheet metal, whatever. Just don't hoard currency or fixed rate bonds and you're more or less okay.
Of course, you may be SOL if it turns out you're wrong and you have to pay some bills in the meantime before the SHTF. Transaction costs do matter.
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